Comptrollqr Generalof the United States

iJ'l Washingtnn, D.C, 20648

Decision

Matter of: Science Applications InternationalCorporation; Department of the Navy--Requestfor Reconsidor ratiorn

File: B-247036.2; B-247036,3

Date: August 4, 1992

Joel R. Feidelman, Esq., James M. Weitzel, Jr., Esq., andJordan S. Fried, Esq., Fried, Frank, Harris, Shriver &Jacobson, for Science Applications InternationalCorporation, the requestor,William L. Walsh, Jr., Esq., J, Scott Hommer III, Esq,, andWilliam Craig Dubishar, Esq,, Venable, Baetjer and Howard,and Ronald L. Shingler, Esq., PRC, Inc., an interestedparty,Eric Lile, Esq., and Bernard T Decker, Esq., Department ofthe Navy, for the agency.Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq.,Office of the General Counsel, GAO, participated in thepreparation of the decision.

DIGEST

Prior decision sustaining protest of an agency's costrealism evaluation is affirmed on reconsideration, where theagency admits that its cost realismnevaluation was defec-tive, as found in the prior decision. Nevertheless, thedecision recommendation--to terminate the awardee's contractfor the convenience of the government and make award to theprotester--ls modified to provide that the agency need notterminate the awardee's contract (and that consequently theprotester is entitled to reimbursement of its proposalpreparation costs), where, after consideration of all thecircumstances surrounding the procurement, including thecost to the government, the impact of the recommendation onthe user agency's mission, as well as the prejudice to theprotester and competitive procurement system, it is foundthat contract termination would not be in the best interestsof the government.

DECISION

Science Applications International Corporation (SAIC) andthe Department of the Navy request reconsideration of ourdecision in PRC, Inc., B-247036, Apr. 27, 1992, 92-1 CPD¶ 396, in which we sustained PRC's protest of the agency'saward of a contract to SAIC under request for proposals

(PEp) No, N61339-91-R-0027 for a logistics trainingsimulator and related supplies and services,

SAIC essentially argues that we erred (1) in sustainingPRCIs protest on an issue, which we raised sua sponte andto which the agency and SAIC did not have an opportunityto respond; (2) in performing an improper and defective denovo cost realism evaluation that was substituted for theagency's evaluation; and (3) in recommending the terminationof SAIC's contract and award to PRC without appropriateconsideration of the costs and disruption of contracttermination and re-award.

The Wavy admits that its cost realism evaluation was defec-tive, as we found in our decision, but argues that it isnot in the government's best interests to terminate SAIC'scontract and requests that we modify our recommendation,The Navy also contends that we sustained PRC's protest on anissue not raised by the protester and that therefore PRC isnot entitled to be reimbursed for its costs of filing andpursuing the protest,

We affirm our prior decision sustaining PRC', protest andawarding it the costs of pursuing its protest, but modifyour recommendation that SAIC's contract be terminated.We also award PRC its costs of responding to thereconsideration requests and its costs of proposalpreparation.

The RFP contemplated the award of a cost-plus-incentive-feecontract for a fully operational, prototype Combat ServicesSupport Training Simulator System (C$SSTrSS), The CSSTSS is acomputer driven training device that will provide a simu-lar~ed battlefield environment on which to teach combatsupport functions, It is, in essence, an integrated systemof/computer and input/output devices that will interfacewith software developed by the contractor to provide thenecessary training for a range of specified combat supportactivities, including medical, transportation, pFrsonnel,grave registration, maintenance, petroleum, ammunition, andsupply services, Besides the hardware requirements, thecontractor was required to develop and provide all software,application programs, operating systems, and diagnosticsoftware necessary to operate the CSSTSS.

'As was the case in our prior decision, portions of theprotest record are subject to a General Accounting Offi.ceprotective order to which counsel for PRC and SAIC have beenadmitted. Our decision, which is based upon protected,confidenttal information, is necessarily general.

2 B-247036.2; B-247036.3

The RFP provided that award would be made to the responsibleofferor whose proposal was evaluated as offering the bestvalue to the government, Technical evaluation factors andsubfactors were set forth in the solicitation. which statedthat, technical considerations, collectively were moreimportant than cost, The RFP also provided for evaluationof the realism of proposed costs,

The Navy received three proposals, including offers from PRCand SAIC1 After discussions and best and final offers(BAFO), the source selection authority (SSA) determined thatall three offerors were technically equal and that awardshould be based upon evaluated cost. 2

The SSA found that all of the offerors' proposed cQsts weresubstantially below the government's baseline cost-estimateand were unrealistically low, Hearing Tzanscript (Tr.) at257, 340. 1itThe Navy performed a cost realism analysis,using two Cost analysis methodologies. Under method I, theagency accepted the man-hours proposed by each offeror, but,with assistance from the Defense Contract Audit Agency(DCAA), analyzed, and adjusted where appropriate, theofferors' labor and indirect cost rates. Certain otheradjustments were also made under this method to accountfor SAIC's and the other offeror's failure to propose allsubcontractor costs. Under method II, the Navy adjusted allofferors' proposed manning levels and-associated costsupwards based upon the agency's undisclosed manning esti-'mated because the agency concluded that all of the offerorsproposed too few man-hours. The offerors' proposed andevaluated costs were as follows:

Proposed Method I Method TI(in millions of dollars)

SAIC $11.2 $17.1 $23.2PRC 18.5 18.4 25.2Offeror A 18.5 19.7 29.9

2 PRC's technical proposal was rated slightly higher thanthat of SAIC and the other offeror.

'A hearing was conducted, pursuant to 4 C.F.R. § 21.5(1992), to receive testimony concerning the agency's inde-pendent government man-loading estimate, the evaluation ofofferors' proposed manning and labor skill mix, and theagency's normalization of offerors' proposed levels ofeffort to that of the undisclosed independent governmentman-loading estimate (IGME).

3 B-247036.2; B-247036.3

The SSA concluded, as follows, that SAIC's proposal wasentitled to award on the basis of its lowest evaluated cost:

"With the technical rankings being so close, Ihave determined that my award decision will bebased on cost , , , In evaluating the costproposals the immediate aberration is, that of theSAIC costs, A large amount of the SAIC differencein cost can be attributed to their making reduc-tions on their subcontractors' cost proposals.This technique was also used by (Offeror A). SAICalso included uncompensated overtime. Pricing inuncompensatedovertime along with subcontractors'costs as proposed, SAIC is still the low offerorby almost $1.4 (million], In an additional effortto ensure that the volume of the scope of work wasadequately evaluated, the (gjovernment estimatefor man-years of effort required was priced in atthe rates offerors proposed. As a result of thisanalysis, SAIC was still the low offeror by almost$2 (million),

"Based upon the; foregoing, I have determined thatSAIC offers significant cost savings no matterwhich evaluation method was used, Since there areno significant technical differences, I determinethat the SAIC proposal represents the best valueto the (government."

Award was made to SAIC on November 22, 1991. Performance ofSAIC's contract was not required to be suspended becausePRC's protest was filed more than 10 calendar days afteraward, and contract performance continued.

Our prior decision found that, in performing the second costrealism methodology (the purpose of which was to normalizeall offerors to the agency's manning estimate), the agencyerroneously used SAIC's proposed subcontractor costs thatthe agency had already determined in its first cost realismmethodology to be significantly and unrealistically low 4

Specifically, the Navy found in the method I analysis thatSAIC in its BAFO had unilaterally and substantially reducedits subcontractors' estimated labor, burden rates from thoseestimated by its subcontractors in-their cost and pricingdata. The SAIC subcontractors' estimated rates', asconfirmed by DCAA, represented audited or forward pricingrates. While SAIC stated in its BAFO that it would"encourage" its subcontractors to achieve lower labor burdenrates, the record showed that the cost reimbursement subcon-tracts did not provide for "capping" these rates at, or

(continued...)

4 B-247036.2; B-247036.3

The Navy's failure to use realistic and probable subcon-tractor costs for SAIC (as determined under method I) in theagency's method II cost evaluation resulted in SAIC'soverall evaluated costs being understated by $9,6 million.Using the Navy's own cost realism methodologies (butemploying SAIC's probable subcontrac''or costs as determinedby the agency), PRC's evaluated costs were $25.2 millionwhile SAIC's costs were $32.8 millipn; Thus, PRC offeredthe lowest evaluated cost by more than $7.6 million.

Since the Navy concluded that the offerors' were essentiallytechnically equal, we foundtthat, under the Navy's stated"best value" methodology, t'a basis for award should be thefirms' evaluated costs, See General Research Cors,70 Comp. Gen. 279 (1991), 91-1 CPD ¶ 183, affd, AmericanMcmt. Sys., Inc.; Deptt of the Army--Recon, 70 Comp,Gen, 510 (1991), 91-1 CPP ¶ 492. Accordingly, we found thatPRC was entitled to award because it offered the lowestevaluated cost, and we recommended that the Navy terminateSAIC's contract for the convenience of the government andmake award to PRC. We also found that PRC wao entitled toits costs of filing and pursuing the protest, includingreasonable attorneys' fees, 4 C.F.R. § 21.6(d)(1). TheNavy stopped performance of SAIC's contract after receipt ofour decision sustaining PRC's protest, pending our decisionon the reconsideration requests.

SArTCchallenges our decision sustainingf(PRC's protest of theagency's cost realism evaluation, complaining, that neitherit nor the agency had any opportunity'to address our findingthat the Navy's use of unrealistic subcontractor costs forSAIC rendered the agency's cost realism evaluation unreason-able; SAIC contends that we raised thin issue sua sponte.SAIC also argues we improperly conducted a defective de novocost realism analysis, substituting our judgment for theagency's ccst realism evaluation,6

4{ ;;continued)otherwise not charging the government for rates beyond,those SAIC was proposing in its BAFO,

5PRC also protested the agency's technical evaluation,contending that the offerors were not technically equal butthat PRC's proposal should have been found technicallysuperior to SAIC's. We did not address this issue since wefound that PRC would be entitled to award, even if theproposals were technically equal.

6SAIC also argues that we disclosed proprietary and confi-dential data of the parties in our decision. Specifically,SAIC complains that we disclosed its proposed costs to

(continued...)

5 B-247036.2; B-247036.3

We disagree that PRC's protest was sustained on an issuethat we raised sua sponte, While it is true that PRCprimarily challenged the agency's normalization of allofferors' labor costs to the IGME in the second cost method-ology, the reasonableness of the Navy's cost realism evalu-ation was at issue throughout the protest, For example, PRCcomplained that SAIC's average labor costs were unrealisti--cally low, objecting, in its initial protest letter, that"1SAIC's proposed subcontractor costs were lower than thoseactually bid by the vendor,"

SAIC also expresses concern that we did not identify for itandcthe Navy the particular problem in the Navy's costrealism analysis or make it a subject of further inquiry andtestimony at the hearing. Thq fact that hearing test$monywas not taken on a particular issue is not dispositiveaofwhether the issue will be significant in the ultimatedecision on the protest. See Department of State--Recon.,B-243974,4, May 18, 1992, 92-1 CPD 1 447. Hearings areconducted to resolve factual disputes and/or clarify leiqalissues in the protest, 4 CF.R, § 21.5, Here, a hearingwas conducted to resolve certain disputes concerning otheraspects of the agency's cost realism analysis, See infrafootnote 3, That we did not specifically consider in thehearing the agency's failure to insert the proper number inthe method II analysis of SAIC's cost proposal--an errorthat the agency now admits that it made--does not make thisprocurement impropriety insignificant or deny SAIC anyprocess that it may be due. Rather, the protest was decidedon the entire record, including the hearing transcript andevidence,

Our conclusion that the agency improperly used unrealisticsubcontractor costs for SAIC in the second cost methodologywas based upon the agency's own determination that SAIC's

6(. ,,,continued)perform the contract, We do not agree that we havedisclosed proprietary information that would cause SAIC anycompetitive harm. While it is true that we'disclosed theofferors' overall, proposed and evaluated costs, these costsinclude numerous cost elements (including their subcon-tractors' total proposed costs). Consequently, it isapparent that the disclosed information is insufficient toprovide competitors or others with any insights as to SAIC'sconfidential pricing or costs, nor does SAIC demonstratethis would be the case. Furthermore, given our recommenda-tion that award be made to PRC and that no further negotia-tions with tho parties would be necessary, there was littlerisk that providing this sort of "bottom-line" costinformation would provide offerors with any competitiveadvantage.

6 B-247036.2; B-247036.3

proposed subcontractor costs were unrealistic and must besignificantly adjusted upward, The Navy provided detailedexplanations and support for its cost realisnx analysis,which, 4s noted above, was based upon the use' of two costmethodologies, First, the Navy adjusted the offerors'proposed costs and rates based upon its cost realismanalysis; then, the agency was supposed to adjust theserealistic costs to account for the agency's normalization cfthe offerors' levels of effort to that of the IGME.

From our review of this two-step cost realism evaluation,which included validating the agency's calculations, wediscovered that the agency had inexplicably used the wrongsubcontractorcosts for SAIC in normalizing SAIC's costs tothe agency's manning estimate,7 This resulted, as we notedin our prior decision, in SAIC's norntalized costs beingsubstantially undqrstated and unrealistic, Rather thanperforming our own cost realism evaluation ap SATC argues,we simply inserted the correct subcontractor costs figurefor SAIC (as the agency had already determined in the firststep of its cost realism evaluation) into the agency's costrealism equation to determine SAIC's normalized probablecosts, Thus, rather than substituting our judgment for thatof the agency, we merely performed a mechanical calculation,using the Navy's own numbers, that revealed that PRC's prob-able costs were lower than SAIC's. Indeed, in its recon-sideration request, the Navy admits that it used the erron-eous and unrealistic subcontract costs proposed by SAIC tocalculate SAIC's normalized costs and concedes that SAIC'smethod II normalized probable costs of performance would beas we calculated them.

SAIC also contends that we should not have used the Navy'ssecond cost realism methodology without first deciding PPC'schallenge to the apr'ncy's normalization of the offerors'manning to the I6r6'.1 At the same time, SAIC cointends thatthe agency properly normalized all offerors' proposedmanning levels to the IGME. We did not decide PRC's protestof the agency's normalization of offerors' manning levelsbecause, as discussed in our prior decision, there was noneed to do so. 8 Given SAIC's and the Navy's views that

'In contrast, the Navy utilized PRCrs subcontract costs,as adjusted in the method I evaluation, in the method IIevaluation.

'The Navy believed that by normalizing manning levels inthe cost evaluation, it was not required to consider in thetechnical evaluation SAIC's more than 50 percent lowermanning than PRC's. Had this been taken into account in thetechnical evaluation, it would appear that PRC would have

(continued...)

/ B-247036.2; B-247036.3

normalization was appropriate, we fail to see how SAIC wasadversely affected by the fact that our decision did notaddress this issue,

SAIC also complains that our decision "does not combine'the two methodologies, Rather the decisQon si'miy ignores(m]ethod 1 and places total reliance on the (GeneralAccounting Office's) own undisclosed (miethod 2 cost realismcalculation," (Emphasis in original,) SAIC is incorrect,As explained above, the two cost methodologies are part of atwo-step process of evaluating and adjusting offerors'proposed costs for realism and normalizing these realisticcosts based upon the government's manning estimates, Thereis no proper method of arriving at a realistic, normalizedcost for each offeror, without combining both costmethods.'

Both SAIC and the Navy challenge our recommendation that theNavy terminate SAIC's contract for the convenience of thegovernment and make award to PRC, The parties contend thatin recommending termination we failed to consider the costsand disruption to the government, and that continuance ofSAIC's contract is in the government's best interest, SAICand the Navy also argue that by recommending termination ofSAIC's contract and directing award to PRC we deprived theagency of the opportunity to consider the correct costrealism information and to take "appropriate measures tomake a best value award,"110

First, we fail to see how the Navy could make a different"best value" determination based upon the corrected cost

'(,,. continued)been considered technically superior to SAIC, In making ourfirst decision, we did not need to resolve this issue.

st

9We also find meritless SAIC's argument that we did notaccord enough weight to the first cost methodology, underwhich SAIC was found to be low offeror, As noted above,both cost methodologies were combined to arrive at arealistic, normalized cost, and this accorded appropriateweight to the first cost methodology. While SAIC was thelow offeror under the first cost methodology, it was notthe low offeror after its extremely low manning level wasnormalized to the IGME, the normalization of which SAICagrees was appropriately done.

1 0SAIC also suggests that if the SSA had been aware thatSAIC was not the low offeror after its costs were normalizedthat the agency may have reopened dis~cussions. The recorddoes not support this assertion, and. the Navy does not nowcontend that it would have sought to reopen discussions.

8 B-247036.2; B-247036.3

information, as SAIC and the Navy zicjqgest. The Navy foundthat SAIC's andrAPRC's proposals werg) technically equals aconclusion wqflcdid not challenge in ourtdecision, Thus, theonly discrimtnator for the award seleqtion was evaluatedcost, See General Research Corp,, suora, Since PRO offeredthe lowest evaluated cost under a proper-cost realismanalysis--a finding the Navy does not chal.l'enge--PRC iP3entitled to award under the Navy's evaluatibn methodologyno other award determination would be possible under theguise of a "best value" determination or otherwise.

The Navy's:"hd BAIC'; contention--that we did not considerthe potential cost Urnd disruption involved in recommendingthe termination of S'tIC's contract and award to PRC--ds alsonot correct. In fashioning our recommendation, we werefully cognizant of tthe agency's potentially substantialliability for termination costs, given SAIC's on-goingcontract performance. Nevertheless, in vietw of our findingthat PRC's evaluated'costs were more than $7.6 million lowerthan SAIC's, we believed that fhe substantial savingspresented by PRC's proposal more than adequately 4ustifiedthe possible termination costs, We were also of the viewthat any delay in contract performance--entailed by the,termination of SAIC's contract and award to PRC--would beminimal, given the agency's testimony at the hearing thatboth PRC and SAIC intended to use similar hardware. See,e.g., Tr, at 205,

In requesting r modification of our recommendation, the Navyand SAICOcontendithat tdie termination of SAIC's contract"1wll seriously impact the (agency's) mission astit willdisrupt delivery and increase project costs because much ofthe awardee's effort will have to be duplicated'by the newawardee." Specifically, thie Navy identified substantialcosts for which it would be liable, that is, $4.3 million inhardware procurement and software development costs, and$655,000 in termination settlement costs. In addition,since our decision, SAIC has offered to cap its subcon-tractor latb\r rates at those proposed in its BV'FO (that is,the subcontractor labor rates that the Navy fcind unrealis-tically low), is performing more of the contract work withits own staff, and is performing with more uncompensatedovertime hours. The Navy claims that these changes inSAIC's proposed performance significantly reduce SAIC'sprobable costs of performance, such that SAIC's probablecosts of performance are now considered to be $3.9 millionless that PRC's.

PRC argues that, given the similarity between PRC's andSAIC's technical approaches, PRC will be able to utilize

9 B-247036.2; B-247036.3

most; if not all, of SAIC's hardware and software develop-ment documentation," Thus, PRC would not have to dupli-cate the costs of SAIC's acquisition of hardware and devel-upment of software, PRC also objects that $AIC prematurelypurchased hardware to increase its costs (as well asincurred fee) in the event of termination, Finally, PRCargues that the Navy ha% not adequately documented SAIC's"post hoc" offers to cap its subcontractor rates and toprovide ?dditional uncompensated ov!0\time in its performanceand so these cost reductions should not be considered,

In determining the appropriate recommendation in cases wherewie find a violation of procurement laws or regulations, weconsider all the circumstances surrounding the procurement,including the seriousness of the procurement defi'ciency, thedegree of prejudice to other offerorst interested parties orthe competitive procurement system, the good faith of theparties, the extent of performance, cost to tlre government,the urgency of the procurement, and the impact of the recom-mendation on-the user or contracting agency's mission. see4 CF,l § 1 .6 (b) Honeywell Into. SVs.D Inn, 56 CWtmp.Gen, 505 (1977), 77-1 CPD ¶ 256, This determination neces-sarily involves the balancing of competing interests, Here,balancing all the interests presented, we conclude that thetermination of SAIC's contract for the convenience of thegovernment may not be in the best interests of the govern-ment because of the additional costs to the government andthe impact on the user agency's mission; these interestsoutweigh the prejudice to PRC and the competitiveprocirement system,

Vt i .

First, the record confirms that the government would incursubstantial costs to terminate SAIC's contract and award toPRC since the agency was ndt required to suspend' performanceof this contract because it was not'-filed within 10 calendardays of award. It is tibe, as PRb argues, that PRC would beable to use most of the hardware that SAIC has purchased for'the government. In this regard, the record shows that $2.1r.illior of SAIC's hardware costs would not be duplicated byPRC,2' The record does not establish, however, that PRCcan use SAIC's software development information and data;rather, the parties' proposed software solutions and

"The government generally acquires title to''ropertypurchased under cost',.. eimbursement contracts andsubcontracts. See Fe'deral Acquisition Regulation§ 52.245-5(c).

"Because we find that most of the hardware can be uoied byPRC, we do not find that SAIC's allegedly premature purchaseof equipment has any bearing on the appropriateness of ourrecommendation.

10 B-247036.2; B-247036.3

rw MM- r7

approaches to rSftware develcpinent do not appear so similaras to compel the conclusion that PRC would be able togenerally use this data and infrnmation, Accordingly, wefind that approximately $1.5 million for the remaininghardware acquisition costs and software development laborcosts would likely be! lost if the government terminatedSAIC's contract. In addition, it appears that the govern-ment could be liable to SAIC for approximately $655,000 intermination settlement costs,

A1.,o, the record indicates that if SAIC, as it"now promises,caps its subcontractor labor rates at, the levels proposed inits DAFO and continues to provide significant uncompensatedovertime hours as a part of its contract performance, FAIC'sprobable costs of performance would be approximately$2 million less than that offered bj PRC }3 While PRCargues that it is unfair to consider SAIC's post-decisionoffers to reduce its contract costst we think considerationof these cost reductions is necessaryd to determine theactual costs to the government entailed in terminatingSAIC's contract, In considering SAIC's offered cap, werecognize the inherent prejudice to PRC that has not beenprovided with a similar opportunity to match SAIC's nowoffered cost reductions but do not think that the potentialprnjudice to PRC in this case outweighs the cost and missionimpact if this contract were terminated,

We agree with PRCO however, that the record does not indi-cate that SAIC has yet bound itself to provides the cappedsubcontractor labor rates or to continue providing the levelof uncompensated overtime hours represented. Accordingly,we think that if the Navy chooses not to terminate SAIC'scontract, the agency should enter into a contractuallybinjing agreement with SAIC to implement that firm'spromises.

In determining whether termination of SAIC's contract isappropriate, we must also consider the impact on the missionof the user agercy--here, the Army.1 4 The Navy states thattermination of SAIC's contract and award to PRC would result

13~~~~~~~~~~~#

"The record does not confirm that SAIC's probable costs'of performance would be $3.9 million less than .RC's, asclotmed by the Navy, although the record does establish thatSAIC's probable costs would be, at a minimum, $2 millionless than PRC's, if SAIC's subcontractor labor rates arecapped. We calculate this difference in probable costs byreference to the agency's original method II cost analysis.

"4The training simulator system is being procured by theNavy for the U.S. Army Combined Arms Support Command at FortLee, Virginia.

11. B-247036.2; B-247036.3

iu an approximately 6-month delay in performance that wouldadversely affect planned maneuvers of the Army. PRC doesnot contend that termination of SAIC's contract would not sodelay needed performance, and we therefore conclude that theuser agency's interests would be adversely affected byterminating SAIC's contract.

In summary, the record shows that termination of SAIC'scontract would result in substantial additional costs to thegovernment and delays in needed performance. Balancedagainst these substantial interests is the prejudice, to PRC,which is not receiving an award to which it was entitled,and to the competitive procurement system. On balance, wefind that it is not in the best interests of the governmentto terminate SAIC's contract, and modify our recommendationaccordingly.

Finally, the Navy objects to out finding that PRC isentitled to be reimbursed for the costs of filing andpursuing the protest. The agency argues that we sustainedthe protest on an issue not raised by the protester andtherefore PRC is not entitled to its protest costs. Wedisagree. As noted above, PRC specifically challenged theNavy's cost realism evaluation, and, thus, its protest wassustained on an issue the protester raised. Moreover, aprZtester is generally entitled to reimbursement of itsprotest costs incurred with respect to all issues pursued,where, as here, they are intertwined parts of a successfulprotest. See, e.g., Omni Analysis: Dep t of the Navy--Recon., 68 Comp. Gen. 559 (1989), 89-2 CPD ¶ 73.

The prior decision, sustaining PRC' s protest, is affirmedexcept that the recommendation is modified to provide thatthe Navy need not terminate SAIC's contract for the conven-ience of the government and make an award to PRC. If SAIC'scontract is not terminated, the agency should enter intoa contractually binding agreement with SAIC that caps SAIC'ssubcontractor labor rates to those proposed in its BAFO andobligates SAIC to provide the level of uncompensated over-time hours that it represented it would provide. Also, ifSAICts contract is not terminated and PRC does not receivethe award, then PRC is entitled to recover its costs ofproposal preparation. See Diverco, Inc.; Metalcastellos.r.l., 70 Comp. Gen. 146 (1990), 90-2 CPD ¶ 512. In anyevent, PRC is entitled to recover its costs of responding to

12 B-247036.2; B-247036.3

the Navy's and SAIC's requests for reconsideration. PRCshould submit its certified claim for these costs directlyto the agency, within 60 working days of receipt of thisdecision. 4 C.F.R. §§ 21.6(d)1), (f) (1).

/L Comptroller Generalof the United States

13 B-247036.2; B-247036.3